Corporate Social Responsibility (CSR) is a grants process, under which Non-Profit Organisations (NGOs) can get fundings from the corporate sector and The Companies Act, 2013 makes it mandatory for corporates to contribute 2 per cent of their net average profits as towards social welfare.
According to the Sub Section 1 of
Section 135 of the Companies Act, CSR is mandatory for companies having a net
worth of a minimum of Rs 500 crore, an annual average turnover of over Rs 1000
crore or a net profit of Rs 5 crore during any financial year.
While the companies Act has created a
huge opportunity for NGOs, to access funds under CSR for social initiatives,
except for citing the age of the NGO and the nature of projects (activities),
the mandate doesn’t provide much of a guideline for NGOs to apply and access
Every organization falling under the
ambit of Section 135 is required to draft a CSR Policy and form a CSR
committee. This CSR Policy and the CSR Committee is responsible for
identification, implementation, monitoring and reporting of the CSR activities.
The NGO planning to apply for CSR
funds should look into the following mandatory points before moving forward:
1. The NGO must have completed 3
years of operations
2. The NGO should have implemented
similar activities in the last 3 years.
These are just the statutory
requirements with reference to Section 135 of Companies Act, 2013. The real
journey starts beyond this.
Every NGO must look into the
1. They need to understand the CSR
policy of the company; they are planning to apply for CSR funds. This will
clarify the process of selection of a CSR project and type of CSR activities
the company undertake which is directly related to CSR objective of the company
2. Though, tax exemption certificates
are not mandatory most of the Companies and CSR committee give preference to
these documents, that include Certificate Under 80G, and 12A of Income Tax Act
3. The NGO must look into its own
documentation as well. They must be ready with the audited financial statements
for the last 3 years, MoA (for Societies and Section 8 Companies), Trust Deed
4. Also, the organization should
document and prepare annual reports for the last 3 years that defines the
activities they have implemented, the sources of funds.
5. Though, optional but given
preference, the NGOs should look into impact assessments of the activities that
they have conducted and the monitoring and evaluation process they follow to be
When the organization is ready they
should start working of drafting a proposal to be submitted to the companies.
Generally, the proposal goes through the following stages (every company can
have its own selection process and is defined in the CSR Policy) before it gets
approved for funding or CSR support:
1. The proposal is screened by the
CSR team before sharing the same with the CSR committee for review and approval
2. The CSR committee, if approves the
proposal is sent to the board for approval.
However, these days’ companies have
defined the selection and approval process based on the project size in
accordance to their CSR policy.
Throughout the process, the NGO should
be ready to present the project proposed before the CSR team and the CSR
committee before the same gets approved.
Founder of MediaCatalyst, a media
portal that focuses on bringing unbiased opinions and news to the forefront,
says that the huge
pool of funds made available because of CSR mandate looks very lucrative for
initiating social development initiatives, however, the ground reality is very
“There are very few companies (large organizations, primarily) that have a well defined CSR activities identification and selection process. Even though NGO have access to the CSR policy, it becomes very difficult to under what process the companies follow. In majority cases, NGOs need to be well connected to ensure the proposal submitted is screened and reviewed. There is a lack of transparency which has caused a lot of so-called CSR consulting organizations to pop-up and take benefit out of this situation causing an increase in operational costs for these projects, NGOs and Companies,” Anshuman says. `